Reem With A View

"Names and attributes must be accommodated to the essence of things, and not the essence to the names, since things come first and names afterwards." – Galileo

Paul McCartney is right, but is the Music Industry wrong?

First, lets hear from Sir Paul McCartney :

“Anyone who does something good, particularly if you get really lucky and do a great artistic thing and have a mega hit, I think you should get rewarded for that.

“I’m in favour of that sort of thing.

He added: “The problem is you get a lot of young bands coming up and some of them aren’t going to last forever so if they have a massive hit that’s going to pay their mortgage forever.”

Source: BBC

Now, please read the following comment from DAVE  in the Silicon Alley Insider which brilliantly analyzes the mistake the Music Industry is making. The comment is written in such a superb manner, am going to put it here verbatim (since the author has given express permission to release it to the public domain.)

Dave:

The real problem is that the industry in general has not adapted to the changing market, and the officially offered releases are monopolistically overpriced. Before the internet, music was a tangible commodity, either a product, (in the case of CDs, cassettes, 8-tracks, records, etc) or a service (in the case of radio broadcasting, and concerts). The nature of a tangible commodity is that it is both desirable and scarce, and is thus valuable. In the case of music as a product, the intangible music was desirable, and the tangible medium on which it was printed was scarce. In the case of music as a service, the intangible music is the desirable part, and the scarce tangible part is “bandwidth”. (As in, a single radio station or live group can only reach a limited number of people)

The internet changed the market, but the industry is operating today as if the old market rules applied. In today’s open market, there is no scarcity inherent in product-music with which to demand value. Music is still desirable, but it is not inextricably tied to any tangible item. Basic economics demands that in any situation where supply is essentially infinite, value is essentially zero.

If money were the only issue, we could conclude that record labels are nothing but manipulative, greedy bastards, out to fleece consumers by destroying the free market and establishing a de facto monopoly over music. But money isn’t the only issue.

The mega hits McCartney is talking about are only possible due to popularity. Restricting distribution in any fashion hurts this popularity. As the labels are well ware, popularity can be leveraged into revenue generating activities. Popular groups can compel greater ticket prices and greater merchandise sales in any market, and greater CD sales in a traditional market.

In a traditional market, failing to restrict CD distribution increases costs and decreases profits. Piracy is seen as a direct threat to sales revenues. However, in an internet P2P market, the cost of distribution is borne by the consumers, not the publishers. The cost to distribute a billion copies is no greater than the cost to distribute a thousand. Using P2P, the cost to manufacture popularity is fixed.

The music industry currently markets only one group: people who are willing to pay for music. They villify and alienate another market: people who share music illegally. They completely ignore a third market: people who would listen to music if they didn’t have to break the law or pay for the music directly. This third market is arguably the largest of the three, it is virtually untapped, but direct marketing of this group is virtually impossible. You can’t make direct sales to this group, but you may be able to convert them into willing buyers; you may be able to get indirect sales – tickets and merchandise, for instance. You can do this if and only if you can reach them.

And here is where we learn that not only are the record labels greedy and manipulative, but they are also massively stupid. They have at their disposal a group of people ready willing and able to provide a revolutionary service, one that can reach a market the labels could only dream about, and instead of working with that group, they try to have its members thrown in jail! (Of course, this only brings more attention to P2P, resulting in more piracy, and compelling every increasing responses by the pirate community… The industry shoots itself in the foot at least twice)

For the first time in history, de-monetizing music distribution can result in greater profits for artists and labels. One of two things can happen: either the labels can adjust their business strategies to adapt to this, or some enterprising individual will create a new label around this new strategy, forcing the rest of the labels to follow suit.

The question is who will accomplish the goal first: Indie artists, or the legacy labels?

(As the author of this comment, I release it to the public domain, free of restrictions)

So,  Paul Mcartney is technically right about artists being paid for their work. But the Music Industry is definitely not doing the right thing by killign an amazing source of REVENUE for those same artists to save an “obsolete” revenue model. Apple I-Tunes is proof that people are willing to pay for downloads, and artists like Prince are proof that by offerring free downlaods, they get to charge a premium to their concerts and earn MORE.

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One Response

  1. ourboy says:

    I’m not knowledgeable enough to comment on the compensation side of the music business. I think there is money to be made there if people would pay for their music.

    More importantly, I think the industry is lost because there are few great artists these days. The popular music scene (rock, mainstream metal, hip-hop, r & B) is populated with some pretty uninteresting artists. There are some good songs out there and some music made by folks with lots of talent. But rarely does music really inspire me these days. When it does, I buy it, even at its bloated pricing.

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